The trial court sustained Blue Shield’s demurrers to plaintiffs’ complaint and granted summary judgment. On appeal, the Fourth District Court of Appeal determined that the complaint’s causes of action were viable and that Blue Shield was obliged to complete its medical underwriting and resolve all reasonable questions arising from the written application before issuing coverage. The court specifically determined that medical underwriting requires health care service providers to do more than simply assign values to the risks disclosed on the application. They must make reasonable efforts in every case to make inquiries outside the application and to answer all reasonable questions arising from the information provided on the application to make sure that a potential subscriber’s application is accurate and complete. Blue Shield did not do any of that in this case, and plaintiffs sustained significant injury and damage as a consequence of that failure.

Had Blue Shield done its investigation before issuing coverage, Is and had it then declined coverage, plaintiffs could have obtained other insurance which would have provided coverage for the injuries Bob Lawrence sustained in his accident. (See Part 3 of 11.)